1. Do you agree with the drivers for the review? Answer 1: Yes 2. What other factors should the Government be considering in this NZ ETS review? Answer 2: Fairness and even handed treatment of all sectors to avoid artificial distortions in economic activity. 3. Should the NZ ETS move to a full surrender obligation for the liquid fossil fuels, industrial processes, stationary energy and waste sectors? Answer 3: Yes 3A. Please explain your answer: THe ETS cannot work effectively with artificial distortions applied. 4. What impact will moving to full surrender obligations have on you or your business? Answer 4: Unlikely to have significant impact on my business as we are a service provider not a manufacturer/grower. 5. If full surrender obligations are applied, when should this be implemented? Answer 5: a) 2016 Outline the reasons for your answer, and include any comments on the pros and cons of applying an increased surrender obligation to a partial or a full NZ ETS reporting a year. THe distortions have been in place too long greatly limiting any benefit from the ETS in reducing GHG emissions. 6. If the NZ ETS moves to full surrender obligations, should potential price shocks be managed? Answer 6: No 6A.Please explain your answer: Economic and environmental realities must be allowed to impact the country to ensure the best use of resources and distortionary subsidization ends. 7. If potential price shocks associated with moving to full surrender obligations should be managed, how should this be done? Answer 7: 7A. Please explain your answer: As above no management! 8. If the $25 fixed price surrender option value should change, what should it change to and why? Answer 8: Market forces must be allowed to set the level i.e. the average of the last six months would be the surrender value for the following six months and so forth.
9. Do you consider the future cost of emissions in your business planning? Answer 9: Yes 9A. How do you do this? We incorporate the expected environment into the estimated business costs for the coming budget year. page 2 10. What would improve your ability to take into account the future cost of emissions in your business planning? Answer 10: Consistency of government policy on the ETS, removal of distortions and full implementation of user pays. 11. Under what conditions should free allocation rates start to be reduced after 2020? Answer 11: All conditions free allocations should cease as soon as practical. 12. What impact would it have on your investment decisions over the next few years if there was a clear pathway or criteria for phasing out of free allocation after 2020? Answer 12: As a service industry we do not undertake capital investment in plant so not relevant. 13. How does the carbon price impact your forestry investment decision-making? Answer 13: The carbon price can be influential in the investment decisions we advise for our clients but this is critically dependent on the NZU price. Below $/NZU impact negligible. Key factors remain log price Forex and cost structures. The current price is so low it has negligible impact. There needs to be substantial change in the management of the ETS before prices can recover to a level that is meaningful. That is stopping free allocations, removing subsidies and full implementation across all sectors with no exceptions. Only then si there any hope of the price even approaching $25/unit. 14. Are there opportunities for the NZ ETS to increase incentives for forestry investments, outside of NZU price? Answer 14: Yes 15. What are your reasons for the above answer? Answer 15: The only potentially successway way is full and even handed implementation of the ETS so all land uses bear the true costs and artificial distortions/subsidies for a agriculture are removed. Anything else would have negligible effect.
16. If international units are eligible for NZ ETS compliance in the 2020s, should any of the following restrictions be placed on their use? Answer 16: a) restrictions on where units can be sourced from (location of and/or types of projects) 16A. Please explain your answer: Many international units used up to May 2015 came from dubious sources which really had very little or no effect on carbon emissions. Only units from full bonafide schemes meeting the same standards as NZU's should be allowed and only if the ETS is fully implemented across all sectors with no distortions/subsidies. 17. Should auctioning be introduced in the NZ ETS? Answer 17: Yes when a) in the next two to three years 17A. Please explain your answer: This would make the market more transparent and fairer and encourage development of the market. 18. What should be the role or purpose of an auctioning function in the NZ ETS, if one were introduced? Answer 18: c) other 18A. Please explain your answer: Introduce transparency, fairness across sellers and buyers, easier to monitor and see the effect of the ETS. NZU prices should not be managed but an auction system would reduce variability and give more predictability for investment decisions. page 3 19. How should auctioned NZUs relate to other sources of unit supply in the NZ ETS, especially NZUs generated through forestry removals and / or international units? Answer 19: 20. What impact has carbon price volatility in the NZ ETS had on your business? Answer 20: a) minor 20A. Please explain your answer: As a service industry direct influence is minor but has meant that ETS related business such as carbon farming has much reduced. 21. Do you think measures should be in place to manage price stability? Answer 21: No 21A. Please explain your answer:
The scheme needs to be market driven with minimal government interference - this would best be achieved by an auction system or a carbon exchange not regulatory intervention. 22. What do you consider are important factors for managing price stability? Answer 22: c) other 22A. Please explain your answer: Reiterated what has been referred to above - a market based auction system, with full participation and no distortions is the best way to reduce price instability which has largely be driven by government interference and external economic factors. 23. What should the Government consider when managing price stability? Answer 23: As said above the government should not be managing price stability as that will cause instability. The less direct interference and manipulation by government the better and more successful the scheme will be in meeting its objectives. 24. Are you aware of ways the administrative efficiency of the NZ ETS could be improved? Answer 24: Yes 25. Can you provide further information to support your answer? Answer 25: A simpler system for forest owners such as was suggested for the Australian scheme which was not implemented whereby an average level of sequestration is maintained rather than the current all or nothing approach. This would reduce monitoring and compliance costs. Product life cycle also needs to be factored in rather that the artificial current situation which assumes all the carbon is released at felling. 26. Are there any barriers or market failures that will prevent the efficient uptake of opportunities and technologies for reducing emissions? Answer 26: Yes incomplete implementation of the ETS this is the market failure and has dramatically reduced the incentives for change. 27. If so, is there a role for the Government in addressing these barriers or market failures and how should it do this? Answer 27: Yes the best thing the government can do is ensure a fully implemented transparent and largely interference free scheme with no distortionary subsidies or exclusions. 28. Please comment here Answer 28: No
Powered by TCPDF (www.tcpdf.org) New Zealand ETS review 2015/16 Name Brian Johnson Organisation (if applicable) Margules Groome Consulting Registered member of NZIF Address PO Box 105891 Auckland Central 1143 Telephone Please enter your email address to receive a copy of your submission